Tata Motors shares fall over 6% as Trump imposes 25% tariffs on vehicle imports to the US

Tata Motors shares plummeted almost 6% in early trading on Thursday after US President Donald Trump slapped a 25% levy on all automobile imports to the US. At 9:55 a.m., the stock was trading 5.26% down at Rs 670.70 on the Bombay Stock Exchange. The reduction was consistent with the overall car sector in India, particularly businesses that export to the United States.

Tata Motors, which owns Jaguar Land Rover (JLR), is anticipated to feel the pressure because the United States is a significant market for the premium automobile manufacturer. According to JLR’s most recent annual report, North America accounted for about one-third of total sales in 2024, with 22% coming from the United States alone. Investors are concerned about how the tariffs may affect the company’s revenues and profit margins. The tariff announcement comes ahead of April 2, when Trump is also expected to impose reciprocal duties on some nations, but more specifics are pending. This uncertainty has exacerbated market uneasiness, resulting in a dramatic decline in Tata Motors’ stock price.

Despite the present strain, Tata Motors’ management recently assured investors that JLR was on pace to exceed its Q4 EBIT margin forecast of 10% and become net debt-free by the end of the fiscal year. These comments aided the stock’s recovery from its 52-week low of 606. However, the most recent tariff hike has increased selling pressure. Despite the rebound from its lows, Tata Motors’ stock remains substantially behind its all-time high of Rs 1,179, set on July 30, 2024. The stock is still 40% down from its high.

Brokerages are divided on how tariffs would affect Tata Motors in the long run. CLSA has maintained a “high conviction outperform” recommendation on the company, stating that it trades at only 1x FY27 Enterprise Value-to-EBITDA, which is much lower than the typical 2.5x multiple. However, Nuvama analysts pointed out that if the US raises tariffs, JLR would have to either boost prices in the US or find methods to decrease expenses to counter the impact.